Public Utilities 2021/04/28ITEM # 01
ABSENT: 2 [Chairperson
E. Medrano & R. Bhalla].
3. PRESENTATION: FISCAL YEAR 2021/22 BUDGET.
A. Nguyen, Utilities Budget Administrator, began his presentation
with an overview of the budget cycle and common terms used. A.
Nguyen then reviewed Fiscal Year (FY) 2022 projections for both
revenue and expenses, describing how COVID-19 stay-at-home
restrictions had severely impacted electric retail demand from
industrial and commercial customers; he noted it also impacted
water sales but to a lesser extent than electric. A. Nguyen
indicated that because of hot and extreme weather events, higher
wholesale energy revenue is anticipated for the current FY.
Reviewing projected expenses, he mentioned how Anaheim Public
Utilities Department (APU) expects to save $4.4M in labor costs,
mainly from the City's Accelerated Separation Program. A.
Nguyen also noted how power supply costs are expected to be
$24M under budget from refinancing the Canyon Power Project
bonds and other savings.
A. Nguyen showed a short video of APU's current year
accomplishments, which included, COVID-19 support that was
provided, community events held, and capital projects completed.
A Board member indicated he was impressed that nearly 70% of
Anaheim's streetlights are now LED. For APU's FY22 Proposed
budget, A. Nguyen explained that although the economic outlook
has improved next year's electric retail sales forecast is
conservative and assumes industrial and commercial load will not
return to pre -pandemic levels in the near term. Describing water
revenue, A. Nguyen mentioned that almost half of next year's
increase in water revenue is expected to result from reimbursement
by the Orange County Water District (OCWD) for groundwater
treatment capital expenses.
Discussing FY 22 proposed expenditures, A. Nguyen indicated that
41 vacant positions were placed in a holding unit, totaling nearly
$6.3M — he explained that these positions would remain vacant
until a need arises and the local economy and APU's finances
improve. A. Nguyen also indicated that the power supply budget
would decrease by $17M due to refinanced and retired debt. A.
Nguyen underscored how APU's operating budget for next year
was flat, but capital investments are proposed to increase by nearly
$17M — reflecting the need to resume capital investments for
reliability and resiliency. He also mentioned that the budget for
APU was balanced.
The Board inquired about the planned bond issuance proposed for
the next FY, asking whether APU still plans to move towards
greater cash funding for capital projects. B. Beelner, Assistant
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General Manager — Finance and Energy Resources, indicated that
it is still APU's plan to transition to cash funding. He mentioned
that the proposed electric bond issuance was one of the few
planned for this decade (before APU is able to cash fund more of
its routine capital needs), and the balance between rates and bonds
will continue to be adjusted based on certain factors.
A Board member reflected on the number of vacancies,
questioning whether it would impact service. D. Lee, Public
Utilities General Manger, suggested that the City's Accelerated
Separation Program was intended to create vacancies and financial
savings, but that APU would backfill critical utility positions,
continue to focus on maintaining reliable services, and prioritize
apprenticeship positions for organizational development.
A. Nguyen introduced C. Pereyra, Utilities Analyst, who spoke
about utility industry challenges such as extreme weather events
and changes in legislation impacting the electric and water system.
C. Pereyra also described APU's ongoing maintenance and
inspection programs, its role in supporting development throughout
the Anaheim, and initiatives and programs planned for next year in
the areas of sustainability, community outreach, and student
engagement.
The Board was encouraged to review the budget documents and
reach out to staff if they have any questions or would like a more
detailed review prior to staff seeking their recommendation to City
Council next month.
4. APPROVAL AND AUTHORIZING THE POSTING OF THE
2021 WATER QUALITY REPORT ON THE ANAHEIM
PUBLIC UTILITIES WEBSITE AND PROVIDING THE
CERTIFICATION OF COMPLETION OF POSTING TO
THE STATE WATER RESOURCE CONTROL BOARD
DIVISION OF DRINKING WATER.
J. Sanks, Environmental Services and Safety Manager, provided a
presentation summarizing the content of the Water Quality Report
(Report), affirmed that APU met or exceeded all federal and state
water quality standards, and discussed the various methods in place
to ensure that all customers and visitors continue to receive high
quality water. J. Sanks mentioned that customers would be
informed through their billing statements that the Report is to be
available on APU's web site and a hardcopy of the Report would
be mailed to customers upon request. J. Sanks also discussed
methods for protecting source water, water testing conducted by
APU, laboratory capabilities, and how water quality is maintained
throughout the drinking water system.
N. Campos Kurtz moved
approval of authorizing the
posting of the 2021 Water
Quality Report on the
Anaheim Public Utilities
website. A. Abdulrahman
seconded the motion.
MOTION VIA ROLL
CALL VOTE CARRIED:
6-0.
ABSTAINED: 0.
ABSENT: 1 [Chairperson
E. Medrano].
2021 - 30
The Board asked whether any private wells were located in the
City. J. Sanks indicated that there are some private wells that are
not connected to APU's water system. The Board inquired about
the difference between requirements for potable versus non -
potable water, such as recycled water, and staff expressed the
water quality report is for drinking water standards, which is very
stringent.
5. PRESENTATION: 2021 WILDFIRE MITIGATION PLAN
UPDATE.
F. Barvarz, Electric Transmission & Distribution Manager, gave a
presentation on APU's 2021 Wildfire Mitigation Plan Update
(Plan) and covered the regulatory requirements including
incorporation of the new guidelines by the Wildfire Safety
Advisory Board (WSAB) to streamline plan preparations by
publicly -owned electric utilities. F. Barvarz also covered the
wildfire cameras that provide situational awareness to APU and
fire crews for improved response. Lastly, he discussed APU's
wildfire mitigation measures including vegetation management and
undergrounding of the Eucalyptus Drive neighborhood, which is
located in a high fire thread zone.
6. APPROVAL OF THE FIRST AMENDMENT TO
AGREEMENT BETWEEN THE ORANGE COUNTY
SANITATION DISTRICT AND THE CITY OF ANAHEIM
FOR CONSTRUCTION OF WATER FACILITIES IN
CONJUNCTION WITH THE STATE COLLEGE
BOULEVARD SEWER PROJECT TO INCREASE THE
REIMBURSEMENT AMOUNT BY AN ADDITIONAL
$513,439.00. *
M. Moore, Assistant General Manager — Water Services, discussed
the background of the Agreement with Orange County Sanitation
District (OCSD) regarding the construction on State College Blvd.
M. Moore indicated that the amendment is needed due to the
unforeseen site conditions during construction resulting in
additional work to complete the project.
7. PRESENTATION: DISTRIBUTED GENERATION AND
ELECTRIC VEHICLE (EV) GROWTH AND IMPACTS.
S. Smith, Integrated Resources Manager, provided an update on
the growth and impacts of distributed generation and electric
vehicles (EV) on APU. S. Smith discussed APU's goal is to be
balanced and strategic in managing the impacts and position on
distributed generation. S. Smith explained solar growth due to
A. Abdulrahman moved
approval of the First
Amendment to the
Agreement between the
Orange County Sanitation
District and the City of
Anaheim for Construction of
Water Facilities in
Conjunction with the State
College Boulevard Sewer
Project. V. Baroldi
seconded the motion.
MOTION VIA ROLL
CALL VOTE CARRIED:
6-0.
ABSTAINED: 0.
ABSENT: 1 [Chairperson
E. Medrano].
2021 - 31
legislative and regulatory matters lead to steep price declines. S.
Smith noted that the ramping of manufacturing furthered price
declines. S. Smith explained the current solar installations are at
37 MW in 2020 with projections out to the year 2030 to grow to 75
MW. S. Smith indicated that peak demand shifted to the early
evening as the sun goes down due to the influx of solar in the
California Independent System Operation (CAISO) wholesale
market. However, solar paired with energy storage can help
alleviate this issue in the future.
S. Smith discussed battery energy storage systems and EV's,
which both currently use lithium ion chemistries. S. Smith
explained that major car manufactures have committed to an EV
future. Additionally, California mandates will accelerate adoption
in California. He noted that similar to solar, batteries experienced
dramatic price declines and EV's cost parity with internal
combustion engines are projected to occur in the 2023 to 2025
range.
S. Smith noted that currently, there are 53 DC fast chargers of the
443 public access EV chargers located in Anaheim. S. Smith
showed a future grid profile for EV and solar combined and the
synergies that can occur.
Lastly, the cost of solar installations as well as wholesale
procurement of renewables focusing on solar plus storage options
in the future were discussed.
The Board noted that the market penetration is still relatively
modest, and that state goals may be optimistic at this time. The
Board also commented that commercial and industrial buildings
may be future opportunities to include solar.
D. Lee made the Board aware that S. Smith will be leaving APU
and recognized him with a plaque for his hard work and service to
Anaheim.
8. QUARTERLY STATUS REPORTS ON CAPITAL
IMPROVEMENT PROJECTS, MASTER AGREEMENTS,
GENERAL SERVICES AGREEMENTS, AND SPOT BID
AWARDS.
M. Moore, Assistant General Manager — Water Services, went over
the Capital Improvement Projects (CIP) for the water utility. M.
Moore noted that APU is currently working on 41 projects, 5 are in
construction, and 7 of those have been completed.
J. Lonneker, Assistant General Manager — Electric Services,
indicated that the electric utility has used 62% of the allotted
budget for CIP. J. Lonneker noted that the substation project is a
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multi -year project. J. Lonneker then went over the projects that are
in construction, currently 24 which are scheduled to be completed
FY 21.
D. Lee described the Master Agreements for construction projects
under $500,000 and noted that due to the $2 million per contractor
cap, that staff has seen a reduction in the number of bids resulting
in reduced competition to mitigate price increases. He explained
that staff is looking into increasing the cap to $3 million to address
this issue, and when the Board inquired if that cap is sufficient, J.
Lonneker explained that it balances the need for multiple bids with
the goal of fostering balance of awards between multiple
contractors.
9. UPDATE ON ELECTRIC SYSTEM ITEMS.
J. Lonneker made the Board aware of recent power outages
resulting from metallic balloons making contact with the power
lines. J. Lonneker reported that approximately 5,000 customers
were impacted over the last 30 days resulting from five separate
metallic balloon incidents. J. Lonneker mentioned that a
community Public Service Announcement (PSA) about safe
handling of metallic balloons is currently running on the local
networks through June as a reminder to help reduce these power
outages.
10. UPDATE ON WATER SYSTEM ITEMS.
M. Moore discussed the water dashboard for the month of April.
M. Moore indicated that dry conditions in California and the
Colorado River basin are continuing to reduce water storage levels.
Additionally, he noted that drought conditions are now statewide,
and Governor Newsom has declared an emergency in two northern
California counties. M. Moore indicated that notifications to
reduce water waste are being planned for this summer and APU is
providing rebates and assistance to customers to reduce water
usage.
M. Moore made the Board aware that City Council approved the
Phase A construction contract award for the Groundwater
Treatment Plant on April 27t' and that APU is also getting ready to
release the solicitation for Phase B this summer.
M. Moore mentioned that an open house for the neighbors of the
La Palma Complex was held on April 24t'. M. Moored shared that
several neighbors attended and were interesting in hearing the
construction plans for Phase A of the Groundwater Treatment
Plant.
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Lastly, M. Moore shared photos of a tour of the Lenain Water
Treatment Plant which was provided to Councilmember Trevor
O'Neil and City Manager Jim Vanderpool.
11. UPDATE ON FINANCE & ENERGY RESOURCES ITEMS.
B. Beelner discussed the monthly finance dashboard with the
Board indicating that the year to date electric revenue through
March 2021 was 0.7% below budget ($2.3M) due primarily to
decreased commercial and industrial demand. B. Beelner
explained that electric costs for the fiscal year fell below budget by
8.0% ($22.6M) causing a net positive budget variance of $20.3M.
B. Beelner then mentioned that year to date water revenue was
5.4% ($4.OM) below budget due to weaker than anticipated
commercial and industrial demand as a result of continued
business restrictions related to the COVID-19 pandemic. He noted
that costs were below budget as well by 5.2% ($3.OM) causing a
negative $1.OM budget variance.
B. Beelner then discussed the monthly Power Supply Dashboard.
He mentioned that due to both an extended outage at the Magnolia
Power Plant and lower than normal wholesale power prices APU
did not gain revenue from the wholesale market in March. B.
Beelner shared that Magnolia Power Plant should return to service
on April 30, 2021.
12. UPDATE ON ADMINISTRATION & RISK SERVICES
ITEMS.
J. Lehman, Interim Assistant General Manager — Administration
and Risk Services, discussed the Wholesale Energy Risk
Management (ERM) Program's Quarterly Compliance report for
the second quarter of FY 21with the Board. J. Lehman indicated
that all wholesale energy transactions met the Program's
requirements and that there were no violations of the ERM during
this period. J. Lehman shared that the Bowerman Landfill Gas
Power Plant was impacted by the Silverado fire during this period
but has been back on-line since December 2020.
J. Lehman then shared that the PUB Legislative Working Group
met prior to the Board meeting to review key bills with the
potential to impact utility operations. J. Lehman indicated that
even though the State Capitol is closed, except to the Legislators
and limited staff when they vote, there have been a number of
hearings and proceedings related to the over 2,000 bills that were
introduced this year. J. Lehman highlighted three of the legislative
bills that APU is following.
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J. Lehman then went over the safety metrics and shared that APU
is meeting its targets and that the statistics were very similar to last
year with the exception of COVID-19 related illnesses and a
shoulder injury that resulted in restricted work duties. J. Lehman
noted that the metrics help APU monitor the safety program and
proactively identify areas that may require further attention.
13. ITEM(S) BY SECRETARY.
D. Lee shared with the Board the items scheduled for the following
Board meeting include:
• Urban Water Management Plan
• Summer Readiness Presentation
• Imported Water Supply Update
D. Lee then shared photos of APU's TreePower Program with the
Board.
D. Lee then discussed the high school scholarship program and
requested an additional volunteer for the virtual interview panel.
Board Members N. Campos Kurtz, R. Gaona, and V. Baroldi
volunteered to participate on the panel.
D. Lee shared a thank you e-mail that was received from Anaheim
Elementary School District for staff s assistance with electric
charging for their new electric buses.
14. ITEM(S) BY BOARD MEMBERS.
V. Baroldi made staff aware of road conditions in the Westmont
area of District 3 due to telecommunication construction. Staff
discussed that the Public Works Department is working to address
roadway impacts and is working with the City Attorneys' Office.
A. Abdulrahman inquired about the status of employees that have
been telecommuting and if the City will be mandating vaccinations.
D. Lee indicated that the City Manager has given all Anaheim
employees a return to the office date of May 3, 2021 and that
vaccines are not mandated but are made accessible to those who
want them.
15. ADJOURNMENT: (NEXT REGULAR MEETING ON MAY
26, 2021 AT 5:00 P.M. PLEASE BE ADVISED THAT SOME
OF THE BOARD MEMBERS MAY PARTICIPATE IN THIS
MEETING REMOTELY.)
N. Campos Kurtz moved to
adjourn the Regular Meeting
at 6:55 p.m., to the Board's
Regular Meeting date of
May 26, 2021 at 5:00 p.m.
V. Baroldi seconded the
motion. MOTION VIA
2021 - 35
ROLL CALL VOTE
CARRIED: 6-0.
ABSTAINED: 0.
ABSENT: 1 [Chairperson
E. Medrano].
Respectfully s mitted,
Dukku Lee
Public Utilities General Manager
Indicates item(s) that will be forwarded to City Council for action upon recommendation by the
Board.
** Indicates item(s) that will be forwarded to City Clerk and City Council for informational purposes.
2021 - 36